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What is the break-even point in sales dollars?

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Question: What is the break-even point in sales dollars?

Options:

  1. Fixed costs divided by contribution margin ratio
  2. Total costs divided by total sales
  3. Total variable costs divided by contribution margin
  4. Sales revenue minus total costs

Correct Answer: Fixed costs divided by contribution margin ratio

Solution: 

The break-even point in sales dollars is calculated by dividing fixed costs by the contribution margin ratio.

What is the break-even point in sales dollars?

Practice Questions

Q1
What is the break-even point in sales dollars?
  1. Fixed costs divided by contribution margin ratio
  2. Total costs divided by total sales
  3. Total variable costs divided by contribution margin
  4. Sales revenue minus total costs

Questions & Step-by-Step Solutions

What is the break-even point in sales dollars?
  • Step 1: Identify your fixed costs. These are costs that do not change regardless of how much you sell, like rent and salaries.
  • Step 2: Calculate the contribution margin ratio. This is done by taking the selling price per unit, subtracting the variable cost per unit, and then dividing that number by the selling price per unit.
  • Step 3: Divide the fixed costs by the contribution margin ratio. This will give you the break-even point in sales dollars.
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